As we noted before, despite record high stock prices and talking-heads imploring investors to believe CEOs are confident, they are not (consider the clear indication of a lack of economic confidence from tumbling capex and soaring buybacks), That is further confirmed today as Markit's survey of over 6000 firms showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further. More worrying, perhaps, is the US is not decoupled whatsoever, with future expectations of US business activity at the lowest since the financial crisis.
The Markit Global Business Outlook Survey, which looks at expectations for the year ahead across 6,100 companies, showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further.
This article appeared on the Zero Hedge website at 9:48 p.m. EST yesterday evening---and today's first news item is courtesy of Manitoba reader U.M.
Senate Banking Subcommittee hearing in Washington, D.C., U.S., Nov. 21, 2014.
"Improving Financial Institution Supervision: Examining and Addressing Regulatory Capture"
Financial Institutions and Consumer Protection
“I don’t think anyone should question our motives or what we are attempting to accomplish.” William Dudley
"Change has to come from the top. Either you need to fix it Mr. Dudley or we have to get someone who will." Sen. Elizabeth Warren
What a greasy little slime ball this Bill Dudley is, but he's no match for Senator Warren. This 9:30 minute youtube.com video clip was posted there last Friday---and I thank Toronto reader 'MichaelG' for sending it along.
The NY Fed and Goldman have combined again to produce fingers scraping on a moral blackboard. The story is – not – told coherently in a New York Times piece.
I’ll comment on only two aspects of the incoherent story. First, contrary to the NYT portrayal of the story, there is typically no ambiguity about whether regulatory information is confidential and there was no ambiguity about the particular information that we read (albeit, not in the NYT) that the NY Fed employee leaked to his former colleague after he joined Goldman Sachs.
Second, the NY Fed’s head, William Dudley’s, response to the latest scandal was “I don’t think anyone should question our motives.” I will argue that given the NY Fed’s intolerable institutional conflicts of interest, and the defense of continuing that conflict by the NY Fed’s leadership, e.g., Dudley, everyone should the regional Feds’ motives.
The NYT article revealed that a former NY Fed employee “Rohit Bansal, the 29-year-old former New York Fed regulator, was [hired by Goldman]. At the time he left the Fed, Mr. Bansal was the “central point of contact” for certain banks.” You have to read two-thirds of the story before you learn Bansal’s name and reading the entire story doesn’t tell you his positions and duties at the NY Fed or Goldman.
William K. Black carves Dudley a new one in this article that appeared on the neweconomicperspectives.org Internet site last Thursday---and it's definitely worth reading.
Q: David, can you explain how the ‘Fed put’ works on the stock markets and bond markets? How exactly does it translate into artificially higher stock prices and lower interest rates?
A: The Fed injects massive amounts of liquidity into Wall Street through the dealer system – that is, the 21 authorized treasury-bond dealers. The liquidity comes in the form of new credits to their bank accounts supplied by the Fed in return for the governments bonds, notes and bills, and even the GSE (Government-sponsored entity) obligations that it buys from them. The credit that the Fed supplies to the dealers is manufactured out of thin air; therefore it expands total credits and liquidity in the system. The dealers use it to buy other types of securities – stocks, bonds, derivatives positions and so forth.
Historically, the purpose of the Fed’s open-market intervention in this form was to encourage the banking system to extend credit to the business and household sectors, thereby stimulating economic growth, as predicated by the Keynesian model. That was always a one-time parlor trick, however, because with each cycle of easing leverage ratios in the business and household sectors were ratcheted steadily higher. Household debt ratios, for example, went from 80 percent of wage and salary income prior to 1975 to 220 percent by 2007.
The problem today is that we have reached ‘peak debt.’ The household sector has $13.3 trillion of debts, even after the modest post- crisis deleveraging; the ratio is still sky-high at 180 percent of wage and salary income.
Consequently, the household sector has been unable to borrow more money, no matter how much credit the Fed has injected through the dealers. That’s very different from where this whole Keynesian financial bubble started 40 years ago when we had, more or less, clean household balance sheets.
This interview was posted on the sprottglobal.com Internet site yesterday sometime.
Police and security services will get new powers as the U.K. faces a terror threat "perhaps greater than it has ever been", the home secretary says.
Unveiling a new counter-terrorism bill, Theresa May said the U.K. faced a security struggle "on many fronts".
Schools, universities and councils will be required to take steps to counter radicalisation.
Internet providers will have to retain Internet Protocol address data to identify individual users.
This article appeared on the bbc.com Internet site at 9:22 a.m. EST on Monday morning---and I thank International Man Senior Editor Nick Giambruno for passing it around.
Fiscal hawks and doves within the E.U. commission and member states continue to disagree on how to deal with France's budget deficit, seen as a credibility test for the E.U..
A meeting of heads of cabinets of E.U. commissioners over the weekend ended without a clear decision on possible sanctions for Paris for having again missed the three-percent deficit target for next year.
France has a projected deficit of 4.3 percent of GDP in 2015 and has announced it will meet the deficit target only in 2017.
Handelsblatt reports that a eurozone finance ministers meeting scheduled for next Monday (1 December) to discuss the E.U. commission's verdicts on the nationals budgets is likely to be postponed.
This story, filed from Brussels, showed up on the euobserver.com Internet site at 9:22 a.m. Europe time on their Monday morning---and I thank Roy Stephens for his first offering of the day.
The head of Germany's Bundesbank cautioned the European Central Bank on Monday about the legal hurdles it would face in embarking on money printing to buy government bonds, underlining its opposition to such a move.
The remarks from Jens Weidmann, who also sits on the ECB's Governing Council, raise a further question mark over ECB President Mario Draghi's ability to deliver after Draghi threw the door open for further measures to bolster the euro zone.
Draghi's comments last week were interpreted by some as meaning that buying government bonds with new money, a policy known as quantitative easing, could come as soon as early 2015. But he faces stiff opposition from Germany.
This Reuters story, filed from Madrid, put in an appearance on their website at 11:42 a.m. EST yesterday---and I thank Manitoba reader U.M. for her first contribution to today's column.
Just over a year ago, thousands of Ukrainians took to Kiev's main square, angry at oligarchs and corruption. But instead of “Europe” and prosperity, they got a coup, more oligarchy, and war.
During the three-month “people power” spectacle in Kiev's Independence Square (Maidan Nezalezhnosti) that began on November 21, 2013, one of the protesters' favorite chants was “Who doesn't jump is a Moskal” (a derogatory term for Russians). After three months of “jumping” - which involved attacking the police, attempting to storm government buildings, and cheering US and European officials who came to support them, the protesters overthrew the legally elected president and establish their own government on February 22, 2014. It has been nine months since then – and a whole year since the “Maidan” protests began; let's try to see what they've been “jumping” for.
Much like the 2004 “Orange Revolution,” the Maidan protest was an exercise in perception management. Officially, the reason the protesters gathered was the government's balking at signing the EU accession treaty. A TV, internet and social media campaign – the very name “EuroMaidan” was a Twitter hashtag coined by some clever PR professional – got the people riled up against the government presented as corrupt, incompetent and selfish.
Was this so? Part of the problem with the E.U. treaty was that it demanded Ukraine restructure its entire apparatus of state and society to the Union's standards, which would have cost something like $19 billion a year for the next decade (per The Telegraph). But Brussels was willing to offer a paltry $750 million (€610 million) in loans. Ukraine needed much more just to stay solvent. It was, by all metrics, a bad deal for Ukraine.
This very interesting op-edge was posted on the Russia Today website at 2:28 p.m. Moscow time on their Monday afternoon, which was 6:28 a.m. EST in New York. I thank Roy Stephens for sending it---and it's definitely worth reading if you have the time or the interest, that is.
One year ago, negotiations over a Ukraine association agreement with the European Union collapsed. The result has been a standoff with Russia and war in the Donbass. It was an historical failure, and one that German Chancellor Angela Merkel contributed to.
Only six meters separated German Chancellor Angela Merkel and Ukrainian President Viktor Yanukovych as they sat across from each other in the festively adorned knight's hall of the former Palace of the Grand Dukes of Lithuania. In truth, though, they were worlds apart.
Yanukovych had just spoken. In meandering sentences, he tried to explain why the European Union's Eastern Partnership Summit in Vilnius was more useful than it might have appeared at that moment, why it made sense to continue negotiating and how he would remain engaged in efforts towards a common future, just as he had previously been. "We need several billion euros in aid very quickly," Yanukovych said.
Then the chancellor wanted to have her say. Merkel peered into the circle of the 28 leaders of EU member states who had gathered in Vilnius that evening. What followed was a sentence dripping with disapproval and cool sarcasm aimed directly at the Ukrainian president. "I feel like I'm at a wedding where the groom has suddenly issued new, last minute stipulations."
The EU and Ukraine had spent years negotiating an association agreement. They had signed letters of intent, obtained agreement from cabinets and parliaments, completed countless diplomatic visits and exchanged objections. But in the end, on the evening of Nov. 28, 2014 in the old palace in Vilnius, it became clear that it had all been a wasted effort. It was an historical earthquake.
This long essay, which is also definitely worth reading, appeared on the German website spiegel.de at 7:00 p.m. Europe time yesterday evening---and it's also courtesy of Roy Stephens.
Suspension of coal supplies from Russia will entail serious energy shortages in Ukraine, a Ukrainian expert said on Monday.
“It is a very dangerous signal: if we receive no coal from Russia we have little chance to find other sources to substitute for it,” Dmitry Marunich, a co-chairman of the Ukrainian Energy Strategies Fund, told the 112 Ukraine television channel. “We will simply have no time and money to sign coal contracts with other suppliers in other countries. We must not let it happen. It will trigger a serious shortage in electricity supplies and rotating power cuts will be inevitable.”
Earlier on Monday, Ukraine’s Minister of Energy and Coal Industry Yury Prodan confirmed reports that Russian companies had suspended exports of steam coal to Ukraine.
“According to information I have received from DTEK and Centrenergo, Russian companies have suspended coal export to Ukraine,” he told the Ukrainskaya Pravda newspaper. “I do not know why but I can say that the reasons are not economic. Both DTEK and Centrenergo pay for coal in due time.”
This very interesting news item, filed from Kiev, appeared on the itar.tass.com Internet site at 10:06 p.m. Moscow time on their Monday evening---and I thank Roy Stephens for sending it.
As Kiev continues to amass its forces in eastern Ukraine despite the ceasefire and use radical nationalist groups as armed battalions, Moscow is concerned about possible ethnic cleansing there, Russian President Vladimir Putin told ARD in an interview.
Speaking with Hubert Seipel of the German channel ARD ahead of the G20 summit, Putin warned of catastrophic consequences for Ukraine if the Kiev government continues to nurture radical nationalism and Russophobia, including in the ranks of its military and National Guard units that are still being sent as reinforcements to the country’s troubled east.
“Frankly speaking, we are very concerned about any possible ethnic cleansings and Ukraine ending up as a neo-Nazi state. What are we supposed to think if people are bearing swastikas on their sleeves? Or what about the SS emblems that we see on the helmets of some military units now fighting in eastern Ukraine? If it is a civilized state, where are the authorities looking? At least they could get rid of this uniform, they could make the nationalists remove these emblems,” Putin said.
This article showed up on the Russia Today website eight days ago---and it's also courtesy of reader M.A.
The foreign ministers of the European Union discussed the situation in Ukraine and their turbulent relations with Moscow agreeing that there is no point to enhance sanctions against Russia.
The meeting in Brussels came on the heels of G20 summit in Brisbane and was followed by German Foreign Minister visit to Moscow in a clear sign that all sides are not ready to prolong the standoff and strive to find the solution to the crisis in Ukraine.
Studio guest Ernest Sultanov, expert from MIR-initiative, an independent think-tank in Moscow, Dr. Hubertus Hoffmann, the Founder and President of World Security Network Foundation, Horvath Gabor, Foreign Editor of Népszabadság newspaper, Budapest, and Soren Liborious, Spokesman, Head of Press and Information Delegation of the European Union to Russia, shared their opinions with Radio Sputnik.
No sanctions were imposed on Russia following the talks in Brussels. Don’t you have a feeling that Europe doesn’t have stomach for sanctions?
Ernest Sultanov: The sanctions are really bad for both sides. So, I don’t think they don’t have stomach to impose the sanctions, I think both sides have to find some other solutions to resolve the issues between them.
This interview was posted on the sputniknews.com Internet site at 12 o'clock noon Moscow time on Saturday---and I thank South African reader B.V. for finding it for us.
The fine arts auctions house Christie's has sold Valentin Serov's painting Portrait of Maria Zetlin for $14,511 million during bidding in London, setting a record for a piece of Russian art sold at auction.
Serov's work was put up for auction by Israeli city Ramat Gan's administration. Christie's had initially estimated the painting's price at $2.3-$3.9 million.
"The Portrait of Maria Zetlin is without doubts, Serov's most unique work, which I had the honor of holding in my hands during a long history of my work at Christie's," International director of Christie's Russian Art Department Alexei Tizengauzen said ahead of the auction.
This interesting news story, filed from Moscow, showed up on their Internet site at 8:45 p.m. Moscow time yesterday evening local time---and I thank reader M.A. for finding it for us.
It wouldn’t be the first time that a meeting of the Organisation of Petroleum Exporting Countries (OPEC) has taken place in an atmosphere of deep division, bordering on outright hatred. In 1976, Saudi Arabia’s former oil minister Ahmed Zaki Yamani stormed out of the OPEC gathering early when other members of the cartel wouldn’t agree to the wishes of his new master, King Khaled.
The 166th meeting of the group in Vienna next week is looking like it could end in a similarly acrimonious fashion with Saudi Arabia and several other members at loggerheads over what to do about falling oil prices.
Whatever action OPEC agrees to take next week to halt the sharp decline in the value of crude, experts agree that one thing is clear: the world is entering into an era of lower oil prices that the group is almost powerless to change.
This new energy paradigm may result in oil trading at much lower levels than the $100 (£64) per barrel that consumers have grown used to paying over the last decade and reshape the entire global economy.
This article appeared on The Telegraph's website at 1 p.m. GMT on Saturday---and it's another contribution from reader B.V.
China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.
Friday's surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world's second-largest economy.
Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent - a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak. "Top leaders have changed their views," said a senior economist at a government think-tank involved in internal policy discussions.
This Reuters article, filed from Beijing, appeared on their Internet site at 10:49 p.m. EST on Sunday evening---and I found it posted on the gata.org Internet site.
China's Industrial and Commercial Bank (ICBC) signed a pact with the Los Angeles city government to promote cross-border yuan trade and set up an offshore renminbi center in California, the bank said on Saturday.
The move to create an offshore RMB center in the largest state in the United States would lay the foundations for greater yuan trade with China, ICBC said in a statement.
The agreement comes at a time when many other countries are ahead of the United States in establishing cross-border trade in yuan.
This Reuters piece, filed from Beijing, was posted on their website at 3:37 a.m. EST on Saturday morning---and reader 'David in California' was the first person through the door with it on Sunday.
Dave and I got together on Sunday afternoon over at all-talk radio WAAM-1600FM out of Ann Arbor, Michigan. We spoke about the dire straits that the world economy is in---but most of it was about precious metals.
The audio interview posted on the davejanda.com Internet site---and it runs for about twenty-five minutes.
The heavy involvement of investment banks in commodity trading creates the potential for market manipulation and conflicts of interest in the gold market, and exchange-traded gold funds may be mechanisms of market manipulation contrary to the basics of supply and demand, according to the 396-page report published last week by the Permanent Subcommittee on Investigations of the U.S. Senate's Committee on Homeland Security and Governmental Affairs.
GATA's friend J.H. points out these findings on Page 38 of the report:
"Possible conflicts of interest permeate virtually every type of commodity activity. If the bank's affiliate leases an electrical power plant, the bank may attempt to use regional pricing conventions to boost its profits, even at the expense of clients that pay the higher electricity costs. If the bank's affiliate mines coal while the bank trades coal swaps, the bank may ask its affiliate to store the coal rather than sell it to help restrict supplies, and benefit from long swap positions, while causing its counterparties to incur losses. If the bank's affiliate operates a commodity-based exchange-traded fund backed by gold, the bank may ask the affiliate to release some of the gold into the marketplace and lower gold prices, so that the bank can profit from a short position in gold futures or swaps, even if some clients hold long positions.
"A fourth problem with mixing banking and commerce is that, in the context of physical commodities, it invites market manipulation and excessive speculation in commodity prices. If a bank's affiliate owns or controls a metals warehouse, oil pipeline, a coal-shipping operation, refinery, grain elevator, or exchange-traded fund backed by physical commodities, the bank has the means to affect the marginal supply of a commodity and can use those means to benefit the bank's physical or financial commodities trading positions. If a bank's affiliate controls a power plant, the bank can 'manipulate the availability of energy for advantage' or to obtain higher profits."
This commentary, along with a link to the Senate report, is posted in this GATA release from Sunday.
Platinum and palladium supply probably will fall short of demand for a fourth year in 2015 as more usage in vehicles helps compensate for rebounding South African mine output, according to Johnson Matthey Plc.
Platinum demand will outpace supply by 1.13 million ounces this year and palladium’s deficit will be 1.62 million ounces, according to a presentation of London-based Johnson Matthey’s platinum-group metals report. They would be the biggest shortfalls ever, based on data going back more than three decades for the metals.
A five-month mine strike that ended in June cut output from South Africa, the largest platinum producer and second-biggest for palladium. Supply shortages should continue next year partly as car demand strengthens in North America and China and stricter legislation requires more of the metals to be used in devices that curb harmful emissions.
“All things being equal, we would expect to see a good bounce back in South African supplies for both platinum and palladium,” Rupen Raithatha, research manager at Johnson Matthey, said by phone from Royston, England before the company presented the data today. “The auto side is going to be good.”
This Bloomberg article showed up on the mineweb.com Internet site yesterday---and it's courtesy of reader U.M. Reader B.V. sent me the same story on this from the bulliondesk.com Internet site---and it's headlined "Platinum seen in record 1.33 million oz. deficit in ’14 – Johnson Matthey".
Interviewed by the German financial journalist Lars Schall for Matterhorn Asset Management's Gold Switzerland, Singapore fund manager and "Things That Make You Go Hmmm..." letter editor Grant Williams says there's no doubt that the gold market is manipulated, that the only question is how much, and that because of central bank intervention there's not much left to free markets.
Schall and Williams cover other subjects, including the nature of money, the abuse of money creation and credit, the likelihood of returning to a gold standard, and the Swiss Gold Initiative. The interview is an hour long and can be heard at the goldswitzerland.com Internet site.
I thank Chris Powell for wordsmithing the above paragraphs of introduction---and I must admit that I haven't had the time to listen to it.
As the debate regarding whether or not Switzerland should keep the bulk of its gold reserves at home on Swiss soil reaches it's climax - the referendum takes place on Sunday - it is telling that the Dutch announced on Friday that they have just secretly repatriated 122 tonnes of their sovereign gold reserves from New York back to Amsterdam.
The repatriation movement has been driven by suspicion that the Federal Reserve and other central banks may have leased or sold gold it was holding on behalf of other countries to bullion banks and that this gold may have been used in order to suppress the price of gold in recent years. Bizarrely, the Federal Reserve’s gold holdings have not been audited in over 50 years.
Questions are already being asked about how the Dutch were able to repatriate such a sizeable volume of gold when Germany's request was brushed aside. It may be that by taking a discreet approach the Dutch allowed the Federal Reserve room to manoeuvre - allowing them to harvest the metal from the open market. Skeptical analysts have suggested that the fall in the ETF gold holdings may have come in handy for the New York Federal Reserve.
Although the German Central Bank has stated that it trusts the Americans as custodians of it's gold reserves - despite being denied access to vaults in New York to view their own gold - the campaign for repatriation of Germany’s gold remains strong.
This must read commentary by Mark O'Byrne appeared on the goldcore.com Internet site on Monday.
From Deutsche bank Behavioral Finance: Daily Metals Outlook
Although gold market operators are currently preoccupied with the prospect of the SNB finding itself obliged by referendum to buy large quantities of bullion, another central bank raised the same possibility yesterday: the ECB. As odd as it sounds, given the contentious internal debate this year over asset purchases in general, ECB board member, Yves Mersch, reminded journalists that the Bank could in theory buy any asset within a QE program. This could mean government debt, equities, ETFs, or even gold. Indeed, within an effective asset purchase program it matters not so much what the asset is, than who the seller is. Given that the eurozone banking system still appears to be a bottleneck in the monetary transmission mechanism, there might be some wisdom in bypassing it. Banks do not hold gold. However, this ‘theoretical’ possibility would quickly run into practical constraints, not least the volume limitations and the problem of having to pick winners and losers.
However, the idea of gold purchases has merit because of the possible sellers. Much gold is held in private households, especially in countries like Germany. In some cases these are unwanted remnants of crisis-driven investments five years ago. A program that targeted these holdings would liberate dormant liquidity, some of which might even flow into consumption.
This very interesting article appeared on the Zero Hedge website at 3:19 p.m. EST on Monday afternoon---and I thank reader 'David in California' for sending it our way.
A week after we reported that the head of the Ukraine central bank admitted in an unofficial, informal interview that Ukraine's gold is gone, all gone, moments ago the Central Bank revealed that, sure enough, the gold holdings in the civil war-torn country have tumbled, as a result of a decision in September to "increase the share of U.S. dollars in a reserve basket", or in other words, to sell the gold. Just don't call it that: in fact, as of today we have a brand new buzzword for gold liquidations: "optimization of international reserves."
From the central bank: National Bank of Ukraine has optimized the structure of international reserves. This is due to timing structure of international reserves and the external position of the country. National Bank of Ukraine decided in September 2014 to increase the share of U.S. dollar in a reserve basket, because the structure of the trade balance of the country is 70.3% in US dollars, 15% in euros. 77.7% of gross foreign debt denominated in Ukraine USD in EUR - 11.2% in SDR - 5.8%.
Recently, there was a significant volatility in global currency markets associated with the strengthening of the US dollar against other world currencies. Therefore, the National Bank of Ukraine decided to reduce the share of gold in foreign exchange reserves to 8%. To this end, the international markets has sold 0.46 million. Troy ounces of gold in US dollars, respectively proportion of gold in international reserves declined to 7.9%.
It appears from this story the Ukraine's central bank that they didn't sell all their gold. This news item put in an appearance on the Zero Hedge website at 10:16 a.m. EST on Monday morning---and reader M.A. was the first person through the door with it.
Central bankers reached a new low overnight when Swiss National Bank President Thomas Jordan warned of "disastrous consequences" from a pulpit in a church on a historic hill in the town of Uster, Switzerland.
“The initiative is dangerous because it would weaken the SNB,” he said yesterday regarding proposals to increase the Swiss gold reserves, at a memorial service in a church which Bloomberg dubbed the 'sermon on the hill.'
The separation of church and state was one of the great achievement of recent years. It looks like we need to see a proper separation of central banking from the state. States and sovereign nations should be in control of central banks, rather than the other way around.
Central bankers and their dogmatic Keynesian money printing creed would like to see themselves and their policies as infallible. Despite, such policies having an abysmal track record throughout history and indeed in recent years.
Banks are turning out to be like lawyers. What won't they stoop to if they have to??? It reminds me of the joke about what the difference was between a lawyer and rat---and the answer was that "there are some things that rats just won't do." This Zero Hedge piece appeared on their website at 4:51 p.m. EST on Monday---and I thank reader Harry Grant for pointing it out. It's worth reading.
The Swiss will vote on a referendum on November 30th that would ban the Swiss National Bank (SNB) from selling current and future gold reserves, repatriate foreign stored gold holdings to Switzerland, and mandate that gold must comprise a minimum of 20% of central bank assets. The SNB does not usually comment on political referendums. However, in this case it has done so quite vocally.
Why has the central bank decided to step into the political fray and oppose this initiative? What are its concerns? Are they valid or motivated by other factors?
The SNB’s primary objections to the gold initiative are three fold. 1) It claims that gold is “one of the most volatile and riskiest investments”, 2) that a 20% gold requirement will lower the “distributions to the confederation and the cantons” since gold does not pay interest like bonds and dividend paying stocks, and 3) that the 20% gold holding requirement will interfere with its ability to conduct monetary policy and complicate efforts to maintain “the minimum exchange rate”, the “temporary” policy of pegging the Swiss franc (CHF) to the Euro (EUR) it initiated in 2011 and continues to enforce to this day.
The first two concerns can quickly be addressed and discounted. Gold is indeed a volatile asset at times but so are bonds and equities. In recent years Greek, Spanish, Italian, Irish and other European bonds have been far more volatile than gold. The SMI, the Swiss stock index, lost over 50% of its value on two separate occasions between 2000 and 2009 while gold steadily rose at an annual rate of 8.50% over the same period.
This very thoughtful article was written by Eric Schreiber, independent asset manager, former head of commodities UBP, former head of precious metals Credit Suisse Zurich. All views expressed are his and may not reflect those of his former employers. This falls into the absolute must read category---and appeared on the goldsilverworlds.com Internet site yesterday.
Rajesh Exports, the leading Indian gold exporter, announced that it has bagged a massive export order from UAE-based jeweler. The company has reportedly secured an export order worth Rs 1,350 crore from Al Sultan Jewellery, UAE. According to the deal, Rajesh Exports will supply designer range of gold and diamond studded jewelry and medallions.
The order is to be executed by end-February next year. According to the company, the execution of the order will contribute significantly to the bottom line of the company. The Bangalore facility will be responsible to meet the order in time. The company expressed confidence that it will be able to complete the order well within the time frame. Incidentally, the Banglaore manufacturing facility, with a built-up area of 500,000 square feet is the world’s largest jewelry manufacturing facility.
Earlier in July this year, the company had secured an export order worth Rs 1,260 crores of designer range of gold and diamond studded jewelry and medallions from Al Jameelat Jewellery, UAE. The company had successfully executed the order within the stipulated deadline of 30 September 2014.
This gold-related article showed up on the resourceinvestor.com Internet site sometime yesterday---and it's the final offering of the day from Manitoba reader U.M.
China's government and private gold reserves likely total almost 16,000 tonnes, Bullion Star market analyst and GATA consultant Koos Jansen figures, calling attention to a Deutsche Bank report estimating that the People's Bank of China is accumulating gold at a rate of 500 tonnes per year.
Jansen's commentary is posted at the bullionstar.com Internet site yesterday---and I found it embedded in a GATA release.
The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.
Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nosebleed 20X their reported LTM earnings.
And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip, and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e., inflated EPS owing to massive buybacks) would be decidedly less exuberant.
In truth, nothing has changed about the precarious state of the world since yesterday. Except… except the Great Bloviator at the ECB made another fatuous and undeliverable promise—this time that he would do whatever he “must to raise inflation and inflation expectations as fast as possible”; and, at nearly the same hour, the desperate comrades in Beijing administered another sharp poke in the eye to China’s savers by lowering the deposit rate to by 25 bps to 2.75%.David Stockman goes supernova in this article that appeared on his website yesterday sometime---and today's first offering is courtesy of Roy Stephens.
Jim Rickards, chief global atrategist at West Shore Funds, says the US economy is still seeing below-trend growth and remains too weak to support an interest rate increase. Jim is also on record as saying that interest rates will never rise again.
This 3:32-minute CNBC video clip was posted on their Web site at 9:20 p.m. EST on Thursday evening---and it's courtesy of Harold Jacobsen.
At the “Core of the Core,” historic market euphoria has pushed excess in U.S. equities and corporate Credit to precarious extremes (relative to rapidly deteriorating global financial and economic fundamentals). Concerted global central bank stimulus measures have exacerbated the divergence between inflated securities prices and deflating prospects for global growth and profits. Worse yet, the redistribution of wealth that accompanies the policy-induced inflation of the “Global Financial Sphere” is worsening already alarming geopolitical tensions. Global central banking and “risk free” government debt are at risk of being discredited.
Why would I contemplate that central bank measures might be losing ability to keep the global Bubble afloat? Over recent weeks we’ve seen the concerted efforts of team Yellen, Draghi, Kuroda and the PBOC have minimal impact on the fragile “Periphery.” Even Friday, on the back of Draghi and the Chinese, crude oil gave back much of an earlier 2.6% gain to close the week up only 69 cents. The Goldman Sachs Commodities index was only slightly positive for the week near multi-year lows. Curiously, Italian CDS increased added a basis point this week. Greek CDS traded to a 13-month high Thursday. Eastern European currencies traded down again this week. Data out of Europe has been just dreadful. Ukraine looks dangerous.
The Mexican peso declined 60 bps this week, trading at the lowest level versus the dollar since the summer of 2012. Mexico succumbing to EM contagion would be a major development. Meanwhile, here at the Bubble’s “Core,” this week saw the S&P Homebuilding Index jump 3.9% and the Morgan Stanley Retail Index rise 2.1% (to a record high). Yet there were a few interesting Bloomberg headlines: “Riskiest Junk Borrowers Imperiled as Yields Jump…;” “Munis Facing First Losses of 2014 as Record Win Streak Imperiled;” “Corporate Bond Spread Versus Treasuries Widens to Most in 2014;” “Bond Record in Sight as Sales Near $4 Trillion.” Now that’s something to ponder: A record $4.0 TN of international corporate bond issuance in the face of a faltering global Bubble. Like many things these days, it brings back (bad) memories of 2007.
Doug's Credit Bubble Bulletin was posted on the prudentbear.com Internet site late on Friday evening---and it's always a must read. I found this item on my own before reader U.D. could send it to me.
Warm temperatures and rain were forecast for the weekend in the city of Buffalo and western New York, bringing the threat of widespread flooding to the region bound for days by deep snow.
Areas where several feet of snow fell this week should brace for significant, widespread flooding, the National Weather Service warned on Friday.
Swept by lake effect storms, parts of western New York including Buffalo, received as much as seven feet (2 meters) of snow, an amount equal to a year's worth of accumulation for the region. Such storms occur when cold air moves across warmer Great Lake waters and can dump heavy snowfall when they hit land.This Reuters article appeared on their Web site at 12:19 p.m. EST on Friday---and it's the second offering of the day from Roy Stephens.
The Bank of England has opened a formal investigation into whether its officials knew of -- and even facilitated -- the possible manipulation of auctions designed to inject money into the credit markets to alleviate the financial crisis.
The probe, which started in the summer, has been revealed just a week after the U.K. central bank published a report that criticised its own response to the foreign exchange rigging scandal.
The rest of this Financial Times story is subscriber protected---and I found it in a GATA release yesterday.
The siege of Knightsbridge is a farce. For two years, an exaggerated, costly police presence around the Ecuadorean embassy in London has served no purpose other than to flaunt the power of the state. Their quarry is an Australian charged with no crime, a refugee from gross injustice whose only security is the room given him by a brave South American country. His true crime is to have initiated a wave of truth-telling in an era of lies, cynicism and war.
The persecution of Julian Assange must end. Even the British government clearly believes it must end. On October 28, the deputy foreign minister, Hugo Swire, told Parliament he would "actively welcome" the Swedish prosecutor in London and "we would do absolutely everything to facilitate that". The tone was impatient.
The Swedish prosecutor, Marianne Ny, has refused to come to London to question Assange about allegations of sexual misconduct in Stockholm in 2010 - even though Swedish law allows for it and the procedure is routine for Sweden and the U.K. The documentary evidence of a threat to Assange's life and freedom from the United States - should he leave the embassy - is overwhelming. On May 14 this year, U.S. court files revealed that a "multi subject investigation" against Assange was "active and ongoing".
This essay by John Pilger was posted on the Asia Times Web site on Monday---and I thank UK reader Tariq Khan for sending it. For obvious reasons, it had to wait for today's column.
Details have emerged indicating that both the Dutch and German governments were preparing emergency plans for a return to their national currencies at the height of the euro crisis.
In early 2012, a few months after the then Greek prime minister Georgios Papandreou and his Italian counterpart Silvio Berlusconi had resigned, the Dutch finance ministry prepared for a scenario in which the Netherlands could return to its former currency.
Dutch TV documentary programme Argos Medialogica reported on Tuesday (18 November), based on anonymous sources, that the ministry had an emergency plan called Florijn, a reference the original name of the guilder, the Netherlands' pre-euro coin.
Current finance minister Jeroen Dijsselbloem also confirmed the existence of the plan on Tuesday in his weekly interview with RTLZ.This very interesting article was posted on the euobserver.com Internet site at 9:53 a.m. Europe time on their Friday morning---and it's another offering from Roy Stephens.
European Central Bank President Mario Draghi threw the door wide open on Friday for more drastic measures to prevent the euro zone from sliding into deflation, promising to use whatever means necessary as China also acted to boost its sagging economic growth.
With many fearing the euro zone could be heading for a Japanese-style lost decade of deflation and recession, Draghi's remarks were reminiscent of when he pulled the bloc back from possible disintegration in 2012 by promising to do "whatever it takes" to back the common currency.
Painting a bleak picture of the state of the 18 countries in the euro bloc, Draghi stressed that "excessively low" inflation had to be raised quickly.
In a blunt message, he said there was now no sign of improvement in the months ahead and the ECB would pump more money into the euro bloc if its current measures fell short.This Reuters piece, filed from Frankfurt at 2:35 p.m. EST yesterday, is courtesy of West Virginia reader Elliot Simon---and it's definitely worth reading.
On Friday activists booed Ukraine’s President Petro Poroshenko as he attended a wreath-laying ceremony at the ‘heavenly hundred’ memorial erected on Institutskaya Street in Kiev.
This Friday Ukraine celebrates the one-year anniversary of the beginning of the pro-Eurointegration protests last year that culminated in a putsch which ousted President Viktor Yanukovich. The people killed during the protests on Institutskaya Street were nicknamed “the heavenly hundred.” US Vice President Joe Biden, who is in Kiev to discuss offering assistance to Ukraine, was slated to participate in the ceremony but changed plans at the last minute. Biden is only the last in a series of US officials who went out of their way to show support for the protesters and the regime that they subsequently installed.
“Shame [on you]!”, “You’re awarding our heroes posthumously!” chanted the crowd that assembled on Friday, which included some of the relatives of the dead. One of the activists pointed out that those wounded during the February clashes at Maidan Square didn’t receive the special status that would’ve provided them with free access to the social and medical assistance they require.
Poroshenko made an attempt to calm the crowd but failed, and was forced to leave the ceremony amid the angry shouting.
This news item, filed from Moscow, appeared on the sputniknews.com Internet site at 3:31 p.m. Moscow time yesterday afternoon---with was 7:31 a.m. EST. I thank Roy Stephens for sending it. The france24.com Internet site carried a similar story on Friday. It was headlined "Ukraine’s Poroshenko heckled at anniversary of Kiev protest"---and it's courtesy of South African reader B.V.
The newly elected U.S. Congress will pass resolutions and apply pressure to U.S. President Barack Obama to provide Ukraine with lethal military assistance, U.S. Senator John McCain told Sputnik news in a Friday interview.
"We [Congress] will be talking a lot about it. We will pass resolutions. We will put every amount of pressure we can on this recalcitrant administration," McCain said when asked about the Obama administration's ongoing refusal to provide lethal military aid to the government in Kiev.
The Senator, who is expected to assume the chairmanship of the Senate Armed Services Committee in 2015, does not know whether the efforts by Congress will be successful.
Whether the issue creates a major clash between the executive and legislative branches of the US government will "depend on whether they [the Obama administration] will see reality or not," McCain said.
This story, filed from Washington, was posted on the sputniknews.com Internet site at 7:31 p.m. EST on Friday evening---and it's another offering from Roy Stephens.
Moscow has warned Washington a potential policy shift from supplying Kiev with “non-lethal aid” to “defensive lethal weapons”, mulled as US Vice President visits Ukraine, would be a direct violation of all international agreements.
A Russian Foreign Ministry spokesperson said that reports of possible deliveries of American “defensive weapons” to Ukraine would be viewed by Russia as a “very serious signal.”
“We heard repeated confirmations from the [US] administration, that it only supplies non-lethal aid to Ukraine. If there is a change of this policy, then we are talking about a serious destabilizing factor which could seriously affect the balance of power in the region,” Russian Foreign Ministry spokesman Aleksandr Lukashevich cautioned.
This news item was posted on the Russia Today Internet site at three minutes after midnight on Friday morning in Moscow---and I thank reader M.A. for his first contribution of the day.
Few people in the world are more qualified to speak about the Ukraine and Russia than Stephen F. Cohen, NYU and Princeton professor Emeritus.
This 39:45-minute audio interview was posted on the johnbatchelorshow.com Internet site on Tuesday---and for length and content reasons, had to wait for today's column. I thank Larry Galearis for bringing it to our attention. It's worth your while if you have the time---and interest.
Russia has signed a contract with Ukraine to deliver nuclear fuel for the country's nuclear energy plants in 2015, the head of Russian nuclear agency Rosatom said Friday.
"A contract for 2015 has been signed to deliver fuel for Ukraine's nuclear energy facilities," Sergei Kirienko said in a speech before a student assembly in Moscow.
The head of the Russian nuclear agency stressed that supplies of nuclear fuel to Ukraine had not been held up even once and shipments have been delivered to Ukraine as scheduled.
In September, Ukraine gave the green light to its nuclear power plants to receive supplies of upgraded nuclear fuel from the U.S. company Westinghouse, a move criticized by Rosatom as a political one.
Well, I sure hope the Russian company is getting paid up front for this, as I wouldn't want to extend a nickel's worth of credit to Ukraine right now. This article appeared on the sputniknews.com Web site at 2:24 p.m. Moscow time on their Friday afternoon, which was 6:24 a.m. EST. It's courtesy of reader M.A., for which I thank him.
These are bleak times. I've been in serious conversation with some deep sources and interlocutors - those who know but don't need to show off, privileging discretion. They are all deeply worried. This is what one of them, a New York strategic planner, sent me:
The propaganda attack against Putin equating him with Hitler is so extreme that you have to think that the Russians cannot believe their ears and cannot trust the United States anymore under any circumstances.
I cannot believe how we could have gotten ourselves into this situation to protect the looters in the Ukraine that Putin would have rid the Ukraine of, and even had the gall to place in a leadership role one of the worst of the thieves. But that is history. What is certain is that MAD [mutually assured destruction] is not a deterrent today when both sides believe the other will use nuclear weapons once they have the advantage and that the side that gains a decisive advantage will use them. MAD is now over.
That may sound somewhat extreme - but it's a perfectly logical extension, further on down the road, of what the Russian president intimated in his already legendary interview with Germany's ARD in Vladivostok last week: the West is provoking Russia into a new Cold War.
This absolute must-read commentary by Pepe was posted on the Asia Times Web site yesterday sometime---and the first person through the door with this essay was reader M.A.
Serbia is not planning to impose sanctions on Russia, said its President Tomislav Nikolic after meeting E.U. Commissioner Johannes Hahn. The latter said the EU expects Serbia to bring its policy in line with the European one if it seeks to enter the union.
Nikolic said that Serbia is not planning to introduce sanctions at the moment, though admitting the country is seeking E.U. membership which implies an obligation to pursue common policies, including foreign.
"What I heard from Hahn is the same what you have heard from him: Serbia is not an E.U. member and it can be independent in pursuing its foreign policy; but E.U. membership would have implied a commitment to pursue a common foreign policy," the President said at a media conference after talks with Hahn, E.U. Commissioner for Enlargement and Good-Neighbourly Relations visiting Belgrade on Thursday.
This is a follow-up story to the one I posted about this subject in yesterday's column. It appeared on the Russia Today Web site at 7:40 p.m. Thursday evening Moscow time---and I thank reader M.A. for digging it up for us.
President Obama decided in recent weeks to authorize a more expansive mission for the military in Afghanistan in 2015 than originally planned, a move that ensures American troops will have a direct role in fighting in the war-ravaged country for at least another year.
Mr. Obama’s order allows American forces to carry out missions against the Taliban and other militant groups threatening American troops or the Afghan government, a broader mission than the president described to the public earlier this year, according to several administration, military and congressional officials with knowledge of the decision. The new authorization also allows American jets, bombers and drones to support Afghan troops on combat missions.
In an announcement in the White House Rose Garden in May, Mr. Obama said that the American military would have no combat role in Afghanistan next year, and that the missions for the 9,800 troops remaining in the country would be limited to training Afghan forces and to hunting the “remnants of Al Qaeda.”
The decision to change that mission was the result of a lengthy and heated debate that laid bare the tension inside the Obama administration between two often-competing imperatives: the promise Mr. Obama made to end the war in Afghanistan, versus the demands of the Pentagon that American troops be able to successfully fulfill their remaining missions in the country.
Since this story appeared on the New York Times Web site, I'm not sure how much of this is real---and how much is made up---so if you decide to read it, do so with an open mind. I thank Roy Stephens for sending it to me late yesterday evening.
That was how the slow and careful rapprochement between Russia and China has been described by Eric Margolis, one of my favorite geopolitical writers.
US shenanigans in Eastern Europe and the East China Sea—fomenting so-called colored revolutions in Ukraine and Georgia (both on Russia’s periphery) and egging on China’s neighbors to make aggressive territorial claims—have pushed the Russian bear and Chinese dragon together. In May, the two uneasy neighbors reached a de facto alliance represented by a 20-year, $400 billion deal for Russia to supply China with natural gas.
A Russia/China alliance shifts the Earth’s geopolitical axis. Historians may look back at the energy deal as the moment the post-Cold War era and the US’s singular position came to an end. The Russia/China team is now a consequential economic and military counterweight to the US. It will operate as an attractant for every country and every faction that for any reason resents the US’s giant footprint in world affairs.
This short, but worthwhile commentary appeared on the International Man Web site the other day.
Moments ago, as traditionally is the case, the Chinese central bank caught the world by surprise and cut rates, notably the deposit rate by 25 bps and the lending rate by 40 while allowing banks to offer interest of 1.2 times the benchmark rate.
This happens as many analysts had been calling for more easing from China for months to help stabilize the faltering economy, but also happens a day after as Bloomberg reported, "Distressed Debt in China? Ain’t Seen Nothing, DAC Says." Basically well over a year after promising deleveraging reforms and a lower trend line growth rate, one which would not see incremental monetary stimulus, Xi Jinping threw in the towel and joined Japan and Europe in aggressively pursuing greener pastures.
It also means that, as expected, China is now clearly paying attention to Japan's unprecedented currency destruction and as Albert Edwards noted a few weeks ago, now that China has finally broken the seal, it is only a matter of time before China also devalues its currency outright.This Zero Hedge article from early Friday morning EST is definitely worth your while---and I thank reader M.A. for his final contribution to today's column.
Satellite images show China is building an island on a reef in the disputed Spratly Islands large enough to accommodate what could be its first offshore airstrip in the South China Sea, a leading defense publication said on Friday.
The construction has stoked concern that China may be converting disputed territory in the mineral-rich archipelago into military installations, adding to tensions waters also claimed by Taiwan, Malaysia, the Philippines, Vietnam and Brunei.
IHS Jane's said images it had obtained showed the Chinese-built island on the Fiery Cross Reef to be at least 3,000 meters (1.9 miles) long and 200-300 meters (660-980 ft) wide, which it noted is "large enough to construct a runway and apron."
The building work flies in the face of U.S. calls for a freeze in provocative activity in the South China Sea, one of Asia's biggest security issues. Concern is growing about an escalation in disputes even as claimants work to establish a code of conduct to resolve them.This Reuters article, filed from Washington, showed up on their Web site at 3:20 p.m. EST on Friday---and it's the final contribution of the day from Roy Stephens---and I thank him on your behalf.
In 133 B.C., Rome was a democracy. Little more than a hundred years later it was governed by an emperor. This imperial system has become, for us, a by-word for autocracy and the arbitrary exercise of power.
At the end of the second century B.C. the Roman people was sovereign. True, rich aristocrats dominated politics. In order to become one of the annually elected 'magistrates' (who in Rome were concerned with all aspects of government, not merely the law) a man had to be very rich.
Even the system of voting was weighted to give more influence to the votes of the wealthy. Yet ultimate power lay with the Roman people. Mass assemblies elected the magistrates, made the laws and took major state decisions. Rome prided itself on being a 'free republic' and centuries later was the political model for the founding fathers of the United States.
By 14 A.D., when the first emperor Augustus died, popular elections had all but disappeared. Power was located not in the old republican assembly place of the forum, but in the imperial palace. The assumption was that Augustus's heirs would inherit his rule over the Roman world - and so they did.
This was nothing short of a revolution, brought about through a century of constant civil strife, and sometimes open warfare. This ended when Augustus - 'Octavian' as he was then called - finally defeated his last remaining rivals Mark Antony and Cleopatra in 31 B.C. and established himself on the throne. Why did this revolution happen?
This very interesting history lesson from 2,000 years ago when laid over what's happening in the U.S., is pretty stark. It's posted on the bbc.co.uk Internet site---and I lifted it from yesterday's edition of the King Report. Another history lesson for the same period is also one that I also borrowed from yesterday's King Report and it's linked here. In some respects, it's a better story than the one I've posted above.
Complex deals employed by Goldman Sachs' metals storage unit to build vast stockpiles and then maintain queues test the spirit of the London Metal Exchange operating code, shocking many traders and confirming others' suspicions.
But the intricate transactions that saw Metro International Trade Services shell out millions of dollars to customers to join exit queues to bolster rental income was within the rules, according to two senior warehousing executives and two veteran traders.
An explosive U.S. Senate report released on Wednesday revealed the "imaginative" methods used to lure millions of tons of aluminum into Detroit, Metro's headquarters, and then keep it there over the past four years.
You know that if either G.S. or JPM is involved, it's "immoral, but not illegal"---and in some cases its both. The disturbing must-read article appeared on the Reuters Web site at 4:23 a.m. EST on Friday morning---and I found it on the gata.org Internet site.
The Federal Reserve may curtail Wall Street commodity businesses after lawmakers said banks' role in energy, power, and metals markets spurred unfair trading advantages and could threaten financial stability.
At a Senate hearing today, Fed Governor Daniel Tarullo said curbs under consideration include ownership limits, restricting how much revenue can be derived from commodities, and requiring Wall Street firms to boost capital. He said the new rules, to be proposed early next year, could restrict banks from investing in oil tankers, coal mines, and other businesses involved in physical commodities.
"We are focusing on the risk to safety and soundness presented by specific activities and on whether those risks can be appropriately and adequately mitigated," Tarullo said at the hearing held by the Senate Permanent Subcommittee on Investigations.
This Bloomberg news item, filed from Washington, was posted on their Web site at 10:40 a.m. Denver time yesterday morning---and I found it embedded in a GATA release.
Eric talks about the Surge in Asian Investment Gold Demand, the Positive Movement in Physical Gold Demand Around the World, and the Possible Impact of the Swiss Referendum on the Physical Gold Market.
This 9:32-minute audio interview conducted by Jeff Rutherford was posted on the sprottmoney.com Internet site on Friday.
A decade ago, when Alan Greenspan was chairman of the mighty Federal Reserve, he was infamous for delivering ambiguous, Delphic speeches that nobody could understand. No longer. I recently had a chance to interview Greenspan, 88, at the Council on Foreign Relations, regarding an updated version of his latest book.
These days the retired Greenspan speaks so clearly that some of his words are still ricocheting around the blogosphere. For what he revealed on the CFR platform was that he harbours considerable doubts about whether recent Western monetary policy experiments have actually helped economic growth. He also fears that such experiments have been so wild that it will be very hard to exit from these policies in the future -- in the U.S. or anywhere else -- without sparking huge market volatility.
Indeed, Greenspan is so worried about future turbulence that he apparently sympathises with investors (and central banks) who are stocking up on gold.
Unfortunately, unless you're plugged into the Financial Times website, which is free if you only read a couple of articles a month, the balance of this story is subscriber protected. There's nothing new in here, of course, as what Greenspan said at the Council on Foreign Relations is already well known---and I certainly covered it in this column. What is interesting is that Gillian Tett, who is as Establishment as you can get, wrote this in the Financial Times of London on Friday. So, from that perspective, it's a big deal---and wouldn't have shown up there without the approval of the senior editor. This is another gold-related news item that I found at the gata.org Web site yesterday---and the actual FT headline reads "Gold: Worth Its Weight?"
GoldCore analyst and GATA consultant Ronan Manly provides a detailed analysis of the opinion polls that seem to be moving against the Swiss Gold Initiative, and he raises a compelling question: While the Swiss National Bank complains that the initiative would severely limit its monetary policy options, the initiative gives the bank five years for compliance, so just how long does the bank intend to chain the Swiss franc to a depreciating euro?
Manly's commentary is headlined "Swiss Gold Vote Likely Tighter than Polls Suggest"---and it's posted at the goldcore.com Internet site. It's on the longish side, dear reader, but definitely worth reading if you have the time---and/or the interest. I thank Chris Powell for wordsmithing "all of the above."
Paul Wilson recently took up the role of Chief Executive Officer at the newly created World Platinum Investment Council (WPIC). The Council was launched by a group of six platinum producers in South Africa, in order to further develop the global market for platinum investment.
Readers may know that our affiliate Sprott Asset Management LP manages one of the largest above-ground stockpiles of platinum in the world, in the form of the Sprott Platinum and Palladium Trust (NYSE: SPPP).
What will the World Platinum Investment Council do? Their CEO Paul Wilson was kind enough to call me up and tell me what it’s all about.
This very interesting 'interview' appeared on the sprottglobal.com Internet site yesterday---and it was 'conducted' by Henry Bonner. Of course the obvious reason that platinum prices are not rising is because its price is being managed like the other three precious metals. I read this commentary---and that crucial fact is nowhere to be found. Either the question was never asked, or the information wasn't volunteered. How typical.
In a move which will it hopes will in some way help resolve India’s 'insatiable appetite’ for gold and the attendant problems with the high current account deficit (CAD), MMTC-PAMP, a 27:73 per cent joint venture between India’s largest bullion importer MMTC and Swiss PAMP SA, is ready with its gold metal account scheme to mobilize gold from small consumers who account for a bulk of gold demand.
The minimum deposit will be around 50 grams of gold and that will address more than 90 per cent of gold consumers in India, Rajesh Khosla, managing director, MMTC-PAMP India told this correspondent.
The scheme would help small retail gold consumers, deposit their gold, melt it and earn interest on it and accrue gold instead of rupees in the account at the time of maturity. On the implementation of the scheme, Mr. Khosla said the Reserve Bank of India (RBI) would submit its views in early December after which the government would take a call on the scheme.
Well, 'scheme' is the operative word in this story---as Manitoba reader U.M. carefully pointed out when she sent me this article yesterday. Filed from Mumbai, it was posted on thehindu.com Internet site at 7:53 p.m. IST on their Friday evening.
The Reserve Bank of India, grappling with a surge in gold imports last month, could support some restrictions for trading houses but two senior policymakers involved in the bank's decision-making said officials were also wary of overreacting.
A senior finance ministry source told Reuters on Tuesday the country would soon announce measures set to center on import restrictions for private trading house that were eased earlier this year. Private jewellery exporters account for the bulk of demand for gold.But the country has yet to announce any steps, and the two policymakers said on Friday there was no agreement yet. "No decision has yet been taken on curbing gold imports," said one of the policy makers, who declined to be named.
This Reuters article, also filed from Mumbai, showed up on their Web site at 7:51 p.m. IST on their Friday evening---and it's another gold-related story I found on the gata.org Internet site.
From his desk in Lower Manhattan, a banker at Goldman Sachs thumbed through confidential documents — courtesy of a source inside the United States government.
The banker came to Goldman through the so-called revolving door, the symbolic portal that connects financial regulators to Wall Street. He joined in July after spending seven years as a regulator at the Federal Reserve Bank of New York, the government’s front line in overseeing the financial industry. He received the confidential information, lawyers briefed on the matter suspect, from a former colleague who was still working at the New York Fed.
The previously unreported leak, recounted in interviews with the lawyers briefed on the matter who spoke anonymously because the episode is not public, illustrates the blurred lines between Wall Street and the government — and the potential conflicts of interest that can result. When Goldman hired the former New York Fed regulator, who is 29, it assigned him to advise the same type of banks that he once policed. And the banker obtained confidential information, along with several publicly available facts, in the course of assignments from his bosses at Goldman, the lawyers said.
This news item appeared on The New York Times website at 9:10 p.m. EST on Wednesday evening---and I found it embedded in a GATA release yesterday morning. It's worth reading.
Moments ago, in the aftermath of the latest scandal involving Goldman's Rohit Bansal getting material information from a NY Fed employee, finally admitted that the original Carmen Segarra "whistleblower" allegations, namely that there was a material weakness (as in it is non-existent) when it comes to the NY Fed's supervision of TBTF banks, by which we mean Goldman Sachs here, were founded and valid when at 4pm on the dot the NY Fed released this:
The Federal Reserve Board on Thursday announced two separate reviews that are underway at the Federal Reserve System to ensure that the examinations of large banking organizations are consistent, sound, and supported by all relevant information.
This Zero Hedge commentary from yesterday is worth your while as well---and it showed up on their Internet site at 4:43 p.m. yesterday afternoon EST---and I thank Washington state reader S.A. for sending it. There was a similar story in the Financial Times which I found in a GATA release yesterday. It's headlined "On the night before hearing, Fed asks if it's too much the tool of investment banks".
Upstate New York is about to be inundated, again, with something chilling: Snow. Meteorologists are predicting another three feet on top of the five-feet-plus already burying Buffalo.
Gov. Andrew Cuomo is calling the early-season snow that has blanketed northern New York and killed seven people a "historic event" that's bound to break records. Deaths have also been reported in Maine, Michigan and elsewhere in the U.S., bringing the toll so far linked to the extreme weather to 20.
Some Buffalo-area residents have been trapped in their snow-bound cars or homes for almost two days. Some 140 miles of Interstate 90, the main artery running across New York, remained closed, from Rochester to the New York-Pennsylvania state line.
This amount of snow if almost unimaginable---and an 'historic event' it is. This story was posted on the upi.com Internet site at 4:36 a.m. EST on Thursday morning---and it's the first offering of the day from Roy Stephens.
The impossible is possible. Never say never.
Wall Street bankers are staring agog at headlines coming from Europe where, in Iceland, the former chief executive of one of the largest banks in the country which was involved in crashing the economy in 2008 has been sentenced to jail time.
As Valuewalk reports, in receiving a one year prison sentence, Sigurjon Arnason officially became the first bank executive to be convicted of manipulating the bank’s stock price and deceiving investors, creditors and the authorities between Sept. 29 and Oct. 3, 2008, as the bank’s fortunes unwound, crashing the economy with it.
It appears he was as shocked by the verdict as Wall Street-ers are, "this sentence is a big surprise to me as I did nothing wrong."
Of course all bankers are as pure as the freshly fallen snow---and it would take no time at all to fill up the world's jails with the crooks inside the world's banking community. This Zero Hedge article appeared on their website at 10:02 p.m. last night EST---and I thank Harry Grant for sending it our way late last night.
The Internal Revenue Service reportedly wants London Mayor Boris Johnson to write a check for taxes he owes to the United States government, but the UK politician says he isn’t paying.
Johnson, 50, has been the mayor of London since 2008 and is considering a bid at Parliament in the near future. In the meantime, however, he might soon find himself in hot water on the other side of the pond. Johnson, who was born in New York but moved at the age of five, told NPR host Susan Page during an interview last week that the US wants him to pay a capital gains tax owed by American citizens who earn income abroad.
Previously, Johnson wrote in a 2006 column that he was “getting a divorce from America” and would renounce his citizenship, noting “for years I have travelled exclusively on a British passport,” and not the US-issued one he also holds. That threat failed to materialize, but a question emailed to the mayor while he was being interviewed by NPR recently might have rekindled his interest — and without a doubt revealed another issue that has peculiarly pitted Johnson against the IRS.
“It is very hard but I will say this: the great United States of America does have some pretty tough rules, you know,” Johnson said. “You may not believe this but if you're an American citizen, America exercises this incredible doctrine of global taxation, so that even though tax rates in the UK are far higher and I'm Mayor of London, I pay all my tax in the UK and so I pay a much higher proportion of my income in tax, then I would if I lived in America.”
This very interesting story put in an appearance on the Russia Today website at 5:26 p.m. Moscow time on their Thursday afternoon, which was 9:26 a.m. in New York. It's the second offering of the day from Roy Stephens.
A decision by UK charity Save the Children to give Tony Blair its annual Global Legacy Award has unleashed a torrent of criticism highlighting the former PM’s role in Britain’s 2003 Iraq war and his controversial business dealings in the Middle East.
The former Labour leader, who is currently a key focus of a public inquiry into Britain’s invasion of Iraq, received the honor on Wednesday night at a star-studded gala hosted by the charity in New York.
Save the Children’s decision to offer Blair the award has provoked outrage across the UK, with critics insisting the move utterly discredits the charity.
This article was posted on the Russia Today Internet site at 6:17 p.m. Moscow time on their Thursday evening---and once again I thank Roy Stephens for sharing it with us.
UKIP has its second elected MP at Westminster after Mark Reckless won the Rochester and Strood by-election.
Mr Reckless received 16,867 votes, 2,920 more than Conservative candidate Kelly Tolhurst's 13,947, with Labour's Naushabah Khan third on 6,713.
The Green Party came fourth, while the Lib Dems got their lowest total ever.
Mr Reckless, whose defection from the Tories to UKIP triggered the contest in Kent, said: "If UKIP can win here, we can win across the country."
This news item appeared on the bbc.com Internet site at 2:42 a.m. EST this morning---and I thank Harry Grant for his second contribution to today's column.
The Dutch government has refused to reveal details of a secret pact between members of the Joint Investigation Team examining the downed Flight MH17. If the participants, including Ukraine, don’t want information to be released, it will be kept secret.
The respected Dutch publication Elsevier made a request to the Dutch Ministry of Security and Justice under the Freedom of Information Act to disclose the Joint Investigation Team (JIT) agreement, along with 16 other documents. The JIT consists of four countries - the Netherlands, Belgium, Australia and Ukraine - who are carrying out an investigation into the MH17 disaster, but not Malaysia. Malaysian Airlines, who operated the flight, has been criticized for flying through a war zone.
Part of the agreement between the four countries and the Dutch Public Prosecution Service, ensures that all these parties have the right to secrecy. This means that if any of the countries involved believe that some of the evidence may be damaging to them, they have the right to keep this secret.
“Of course [it is] an incredible situation: how can Ukraine, one of the two suspected parties, ever be offered such an agreement?” Dutch citizen Jan Fluitketel wrote in the newspaper Malaysia Today.
Wow! You couldn't make this stuff up! This Russia Today news item was posted on their website at 12:41 p.m. Moscow time on their Thursday afternoon---and it's courtesy of reader 'h c'. It's worth reading.
Second Mistral-class amphibious assault ship built in France under contract with Russia was floated out Thursday, a RIA Novosti correspondent reported.
The helicopter carrier, named the Sevastopol, left its dry dock in the French port city of Saint-Nazaire before just a few onlookers, our correspondent noted.
Russia and France signed the $1.5 billion deal for two Mistral-class ships in June 2011. The first carrier, the Vladivostok, is expected to join the Russian Navy by the end of this year, while the Sevastopol is due to arrive in Russia in 2015.
But the deal has been in jeopardy after the West slapped Russia with economic sanctions over Ukraine. French President Francois Hollande in October threatened to suspend the deliveries of the ships, citing Russia’s alleged involvement in the Ukrainian conflict — a claim that Moscow has repeatedly denied.
This story appeared on the sputniknews.com Internet site at 8:28 p.m. yesterday evening Moscow time---and it's also courtesy of Roy Stephens.
Polish fruit farmers blocked a road near Annopol and in Leokadiow in Lubelskie province in the southeastern part of the country on Tuesday, calling for more support from the Polish government after being hit hard by the Russian food embargo. Protesters brought traffic to a halt, moving along a crosswalk with banners, flags and placards.
In response to European sanctions, Russia imposed a one-year import ban on fresh produce from the EU in August. Prior to the embargo, Poland accounted for about 50 percent of apple imports to the Russian market.
The above two paragraphs are all there is to this brief news item that showed up on the Russia Today website at 3:50 p.m. Moscow time on their Wednesday afternoon. Once again I thank Roy Stephens for sending it.
The death rate in the Ukraine conflict has increased in the past eight weeks despite the declaration of a ceasefire in September, the United Nations said on Thursday.
In total, more than 4,300 combatants and civilians have been killed in eastern Ukraine since pro-Russian rebels seized border regions in April. Nearly a million people have fled the area, with a surge in the past two months, the U.N. said.
Since a formal ceasefire was agreed by Ukraine, Russia and the rebels in early September, an average of 13 soldiers, rebels, and civilians had died every day, a report by U.N. human rights monitors said.
This Reuters article, filed from Geneva, appeared on their Internet site at 9:07 a.m. EST yesterday---and it's courtesy of reader M.A.
Why is it that top Western leaders seem to have a tendency toward wisdom only after leaving top office?
During Putin's visit to Australia for the G20 meeting former Australian P.M. Paul Keating gave an interview to Australian TV starkly critical of NATO.
He heavily criticized the West for making a serious error in extending NATO at the end of the Cold War.
He thinks that current events are a result of that flawed decision.
This interesting article appeared on the russia-insider.com website yesterday sometime---and it's courtesy of Roy Stephens once again.
The E.U.’s attempts to coerce Serbia into joining anti-Russian sanctions are nothing but blackmail, says the head of the State Duma Foreign Affairs Committee.
“Presently the European Union is trying to force Serbia, which is not an E.U. member, to join their sanctions program. They are practically blackmailing Serbia: either it joins the sanctions against Russia or [the bloc] won’t see it as a country with a chance of joining the E.U.,” M.P. Aleksey Pushkov (United Russia) told reporters at a Thursday press conference in Moscow.
“The problem for Serbia is that in any case it has no prospects for joining the EU anytime soon. Even if they join the anti-Russian sanctions now, they would simply succumb to blackmailers and no one would accept them in the E.U. in one year for doing this,” he added.
The comments came after E.U.’s Enlargement Commissioner Johannes Hahn said that Serbia would have to join E.U. sanctions against Moscow if it wants to be part of the European Union.
This is another article from the Russia Today website---and this one was posted there at 10:43 a.m. Moscow time on their Thursday morning, which was 2:43 a.m. EST. Once again I thank Roy Stephens for bringing it to our attention---and it's certainly worth reading.
A state-owned Chinese company has signed a $12 billion agreement to build a railway along Nigeria's coast that it billed as China's single largest overseas contract, state media said Thursday.
China Railway Construction Corp. Ltd. (CRCC) signed the official construction contract with the Nigerian government on Wednesday in Abuja, the Xinhua news agency said.
The Nigerian railway will stretch for 1,402 kilometres (871 miles) along the coast, linking Lagos, the financial capital of Africa's largest economy and leading oil producer, and Calabar in the east, according to the report.
The $11.97 billion deal marks China's largest single overseas contract project so far, it said, citing CRCC.
This interesting article, filed from Beijing, appeared on the france24.com Internet site at 8:45 a.m. Europe time on their Thursday morning, which was 2:45 a.m. in New York. My thanks go out to South African reader B.V. for finding it for us.
Manufacturing activity in China stagnated in November, British banking giant HSBC said Thursday (Nov 20), warning of "significant" pressures on the world's second-largest economy as its key purchasing managers' index (PMI) hit a six-month low.
HSBC's preliminary PMI for the month came in at the 50.0 breakeven point dividing expansion and contraction, the bank said in a statement. It was lower than October's 50.4 and was the weakest reading since May's 49.4, according to the bank's data.
The index tracks activity in China's factories and workshops and is a closely watched indicator of the health of the economy, a key driver of global growth.
Protracted easing in new export order growth led output to contract for the first time in six months, while lingering deflationary pressures suggested domestic demand remained insufficient, Qu Hongbin, HSBC's economist in Hong Kong, said in the statement.
This news story put in an appearance on the channelnewsasia.com Internet site at 11:39 a.m. Singapore time on their Thursday morning---and it's the second offering of the day from reader M.A.
Brazil's Petrobras is the most indebted company in the world, a perfect barometer of the crisis enveloping the global oil and fossil nexus on multiple fronts at once.
PwC has refused to sign off on the books of this state-controlled behemoth, now under sweeping police probes for alleged graft, and rapidly crashing from hero to zero in the Brazilian press. The state oil company says funding from the capital markets has dried up, at least until auditors send a "comfort letter".
The stock price has dropped 87pc from the peak. Hopes of becoming the world's first trillion dollar company have deflated brutally. What it still has is the debt.
Moody's has cut its credit rating to Baa1. This is still above junk but not by much. Debt has jumped by $25bn in less than a year to $170bn, reaching 5.3 times earnings (EBITDA). Roughly $52bn of this has been raised on the global bond markets over the last five years from the likes of Fidelity, Pimco, and BlackRock.
This longish, but must read article by Ambrose Evans-Pritchard appeared on the telegraph.co.uk Internet site at 9:52 p.m. GMT on their Wednesday evening---and it's the final offering of the day from Roy Stephens. I thank him on your behalf, dear reader.
“One focus for the subcommittee is the management of Detroit-area metal warehouses run by Metro Trade Services International, the largest U.S. warehouse company certified to store aluminum warranted by the London Metal Exchange for use in settling trades.
Since Goldman bought Metro in 2010, Metro warehouses have accumulated up to 85 percent of the U.S. LME aluminum storage market...
Since Goldman took over the warehouses, the wait to withdraw LME-warranted metal has increased from about 40 days to more than 600 days, reducing aluminum availability and tripling the regional premium for storage and delivery costs...
The investigation revealed a number of previously unknown details about these deals: that Goldman’s warehouse company paid metal owners to engage in “merry-go-round” deals that shuttled metal from building to building without actually shipping aluminum out of Metro’s system; that the deals were approved by Metro’s board, which consisted entirely of Goldman employees; and that a Metro executive raised concerns internally about the appropriateness of such “queue management.
This news item was posted on the zerohedge.com Internet site at 9:28 a.m. EST yesterday---and it's courtesy of reader M.A.
Sales by the United States Mint to its authorized purchasers (APs) of 2014 American Eagle 1-ounce silver bullion dollar coins resumed Nov. 17, 12 days after being suspended because of a depleted inventory.
Sales resumed after the U.S. Mint was able to replenish its stockpile of coins. The U.S. Mint had 1,525,000 of the 2014 American Eagles silver dollars available Nov. 17 for APs to purchase on an allocation basis, and those purchasers bought 1,012,000 coins from the total allotted.
The U.S. Mint has experienced significantly increased investment demand over the past several weeks. Through the close of business Nov. 17, the Mint recorded cumulative sales of 40,393,000 of the silver American Eagles. Sales of the coins in 2014 are on track to break the 2013 sales record of 42,675,000 coins. (Cumulative sales may include coins minted in more than one year, so are not the same as yearly mintages.)
As I've said on many occasions all year long, this "investment demand" that they're talking about is NOT coming from John Q. Public. That narrows it down to Ted Butler's Big Buyer. This brief article appeared on the coinworld.com Internet site on Tuesday---and I thank reader Tolling Jennings for sharing it with us.
Some of the biggest price moves in gold since late October have, unusually, occurred in Asian hours and traders more accustomed to following the lead of their Western counterparts suspect a big increase in algorithmic trading may be to blame.
Sensitivity to the dollar-yen exchange rate may also help explain the moves, although some traders speculated that the timing looked suspiciously like attempts to catch Chinese traders off-guard during their lunch break.
Liquidity in Asia tends to be thin until Europe wakes up but recent weeks have been different: COMEX gold futures, the busiest gold contract in the world, have suffered sharp sell-offs in Asia, sometimes sparked by the news flow or currency moves but often for no identifiable reason.
"I have spoken to a lot of people about it and the general consensus seems to be that there is a big increase in algorithmic and high-frequency trading in this time zone nowadays as it can be quite easy to push about," he said.
It's JPMorgan et al---probably hand-in-hand with the BIS---and I've been writing about this for years. Only now does the main stream media get interested, but it's an absolute guarantee that they won't dig any deeper. This Reuters article, filed from Singapore, appeared on their website at 2:05 a.m. EST yesterday morning---and I found it in a GATA release.
From looking at rising SGE withdrawals and Indian import in recent months, we knew demand was increasing consistently and huge amounts of physical gold had to be supplied from somewhere. As I’ve written in a previous post, this type of gold demand can’t be met by just mine supply and so the metal has to be sourced from countries that have large stockpiles, the usual suspects: the U.K., Hong Kong and Switzerland.
In 2013 the U.K. was severely drained (net 1,424 tonnes), last week we learned Hong Kong became a net exporter since August 2014, the latest trade data from Switzerland shows the Swiss net exported 100 tonnes of fine gold in October---75 tonnes net to India and 45 tonnes net to China.
Customs data of the usual suspects (Switzerland, the U.K. and Hong Kong) is getting exciting; they can’t net export gold forever. We know there are often shortages in these trading hubs, it’s only the price of gold that tells us otherwise.
The Financial Times reported there are currently shortages in London, from November 14: As one refiner told me: “Over the past four weeks my cost of hedging has risen by 30 per cent. Not only that, but there is not enough liquidity in the physical market in London to settle my obligations as they come due. I have to fly gold from Zurich to London, because there just is not enough gold on offer in London. You never used to have to do that.”
The export numbers in the second paragraph don't add up, as 75 and 45 add up to 120 tonnes, so I'll be interested to see if Koos has an explanation for this in his next commentary. This was posted on the bullionstar.com Internet site yesterday sometime---and despite the above issue, it's definitely worth reading. I found it over at the gata.org Internet site.
GATA consultant and Bullion Star market analyst Koos Jansen got a prominent place this week in a report on gold broadcast on the "Een Vendaag" ("One Today") news program of the Netherlands public television network, Nederland 1.
The program had a nationwide audience in the Netherlands. It covered the Swiss Gold Initiative, substantial gold buying by China and Russia, the German Bundesbank's attempt to repatriate its gold from the Federal Reserve Bank of New York, and the possibility of a transformation of the world financial system that would reintroduce gold in some form. The program is not quite 8 minutes long---and can be viewed at Bullion Star's Internet site.
The program is in Dutch but you can activate excellent English subtitles by clicking on the "CC" button at the bottom of the YouTube window---and there's a transcript as well. This is another story I found on the gata.org Internet site---and it's worth your while.
The Dutch central bank has secretly brought a large part of the national gold reserves being held in a secure depot in New York back to Amsterdam.
In total, 120 tonnes of gold valued at €4bn has been brought back to the Netherlands by ship, Nos television said.
The high security reparations for the move took months.
The central bank decided to bring some of its gold reserves back to the Netherlands to ensure a better spread, the bank said in a statement.
In addition, the bank hopes to boost consumer confidence by showing there is enough gold in the Netherlands to take the country through a new economic crisis.
So, why can't/won't Germany do the same thing. This story was posted on the dutchnews.nl website this morning--and I found it on the Sharps Pixley website.
A few weeks ago I heard a rumor that the Netherlands were repatriating some of their official gold reserves from the FRBNY. From one of my sources I even heard which security logistics company is shipping the metal, but I was kindly asked to not share this company’s name.
Last week I was approached by a financial journalist, Theo Besteman, from the biggest newspaper in The Netherlands, De Telegraaf. He asked me if I knew anything about the repatriation of Dutch gold from the FRBNY as he heard from several sources DNB was following the German central bank in repatriating gold (for the ones that are under the assumption Germany has ceased its repatriation program, please read this). I told him I heard some rumors about it and that the source was one of the big security logistics companies. He wanted to know which one, but I couldn’t tell him that. Apparently the rumors were true and Besteman did a good job finding out what was happening. The front page of De Telegraaf today: Gold Shipped In Utmost Secret.
De Telegraaf reports that for years there have been doubts at the DNB if the Dutch gold was still in New York. After a very secret and almost military operation DNB has shipped gold from Manhattan to Amsterdam, to bring about a more balanced allocation of its gold reserves and give the Dutchcitizensmore confidence by storing the goldon ownsoil to guidethe country, ifnecessary, through a following major crisis. In the previous weeks many armored trucks were seen at the DNB in Amsterdam.
The impact of the Dutch gold repatriation can be huge. First of all, because it underlines more and more countries are getting nervous about their gold reserves stored in the U.S. Venezuela repatriated most of its reserves from abroad in 2012, the year Germany also announced a repatriation schedule from the US and France. While Germany settled with the US to ship 300 tonnes spread over 8 years, the Dutch set a new trend to insist on immediate delivery. If more counties will follow there can be a global run on gold.
This commentary by Koos is also one I plucked from the Sharps Pixley website this morning---and it's an absolute must read. It was posted on the bullionstar.com Internet site late on their Friday evening.
Gold miners' costs are mostly higher than current spot prices, increasing the likelihood of write downs next year, according to Nick Holland, chief executive officer of Gold Fields Ltd.
Across the industry, costs are about $1,300 an ounce including debt repayments, Holland said by phone from Johannesburg today, citing analysts' research. Gold dropped 0.1 percent to $1,182 an ounce, bringing the decline since the beginning of 2013 to 29 percent.
"The industry by and large is under water," Holland said. "I would expect further write downs. Production I think will be curtailed but it will take some time to filter through the system."
Nick Holland certainly knows what's going on inside the gold market, but won't breath a word of it. This Bloomberg story, filed from Johannesburg, showed up on their website at 12:44 a.m. Denver time yesterday morning---and it's another gold-related story I found on the gata.org Internet site.
The U.S. posted a record inflow of long-term portfolio investments in September as the dollar strengthened and foreign buyers accumulated corporate debt, Treasurys and agency securities.
Foreigners bought a net $164.3 billion in long-term financial assets after $52.1 billion in purchases in August, the Treasury Department said in a statement Tuesday in Washington. The previous record was an inflow of $139.7 billion in March 2010.
The figures suggest the U.S. is luring investors with economic growth that’s outpacing other developed nations, as the euro area faces low inflation and slack demand and Japan copes with a recession. The data also showed Americans are selling foreign securities at a record pace.
“The U.S. is looking like the cleanest dirty shirt from a global perspective,” said Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York. “You had the U.S. actually lead the way in global growth, and a lot of people were attracted by that — they’re trying to keep their holdings more domestic.”
"Cleanest dirty shirt" pretty much sums it up, as does the phrase "the best looking horse in the glue factory." Today's first news item was posted on the moneynews.com Internet site at 5:57 p.m. EST Wednesday afternoon---and it's courtesy of West Virginia reader Elliot Simon.
Alan Greenspan couldn’t control long-term interest rates a decade ago, and bond investors are betting Janet Yellen’s luck will be no better.
When then-Federal Reserve Chairman Greenspan raised the benchmark overnight rate from 2004 to 2006, long-term borrowing costs failed to increase, thwarting his attempts to tighten credit and curb excesses that contributed to the worst financial crisis in 80 years.
“We wanted to control the federal funds rate, but ran into trouble because long-term rates did not, as they always had previously, respond to the rise in short-term rates,” Greenspan said in an interview last week. He called this a “conundrum” during congressional testimony in 2005.
That same year, then-Fed Governor Ben S. Bernanke said a glut of investment dollars from overseas was holding down U.S. interest rates as savers in economies such as China sought safe places to stash their export earnings.
This Bloomberg article, filed from New York, appeared on their Internet site at 2:08 p.m. EST yesterday afternoon---and it's the second offering in a row from Elliot Simon.
Democrats urging President Obama to “go big” in his executive order on immigration might pause to consider the following scenario:
It is 2017. Newly elected President Ted Cruz (R) insists he has won a mandate to repeal Obamacare. The Senate, narrowly back in Democratic hands, disagrees. Mr. Cruz instructs the Internal Revenue Service not to collect a fine from anyone who opts out of the individual mandate to buy health insurance, thereby neutering a key element of the program. It is a matter of prosecutorial discretion, Mr. Cruz explains; tax cheats are defrauding the government of billions, and he wants the IRS to concentrate on them. Of course, he is willing to modify his order as soon as Congress agrees to fix what he considers a “broken” health system.
That is not a perfect analogy to Mr. Obama’s proposed action on immigration. But it captures the unilateral spirit that Mr. Obama seems to have embraced since Republicans swept to victory in the midterm elections. He is vowing to go it alone on immigration. On Iran, he is reportedly designing an agreement that he need not bring to Congress. He already has gone that route on climate change with China.
The legal or constitutional case for each is different, but the rationales overlap: Congress is broken, so Mr. Obama must act. Two-thirds of Americans did not vote in the midterms, and the president must represent them, too. He has tried compromise, and the Republicans spurned him.
This 'up yours Mr. President' from The Washington Post's Editorial Board appeared on their website on Monday---and that makes it three in a row from Elliot Simon.
The shipping season on the upper Mississippi River will end on Thursday as ice surrounding locks and dams near Minnesota's Twin Cities forced the earliest winter closure on records that date back to 1969, the U.S. Army Corps of Engineers said.
"There's so much ice through the whole system," said Bryan Peterson, navigation manager for the Army Corps' St. Paul district. "They're getting the barges they can out and not risking getting stuck there all winter."
There were two tow boats waiting to pass lock and dam No. 2 near Hastings, Minnesota. Once they moved down river, no more vessels were expected, Peterson said.
The closure came as a blast of arctic air brought early snow and freezing temperatures across the United States.
This Reuters story, filed from Chicago, appeared on the news.yahoo.com Internet site about 8:45 CST last evening---and I found it all by myself!
The threat of jail is a far more effective tool for reining in bad behaviour at banks than the prospect of losing bonuses, according to the Bank of England policymaker leading a review into financial market regulation.
Minouche Shafik told MPs that criminal sanctions “are top of the list in making them think twice, making them pay is further down the list”.
It came as a court in Iceland sentenced the former chief executive of Landsbanki, to 12 months in prison for market manipulation.
Sigurjon Arnason was convicted of manipulating the bank's share price and deceiving investors in the run up to the financial crisis that saw Iceland's banking system collapse.
At least someone agrees with me, but talk is cheap. Will they walk the walk? I found this story on the telegraph.co.uk Internet site at 6:41 p.m. GMT on Wednesday evening.
Hungary plans to break ground next year on its stretch of the South Stream pipeline to send natural gas from Russia to Europe. It is in defiance of E.U. and U.S. calls to halt the project over frosty relations with Moscow.
One major reason Hungary has thrown its support into South Stream is the lack of a better option since the EU-backed Nabucco pipeline, which was supposed to deliver gas from Azerbaijan to Europe, failed.
"Nabucco will not be built and after nearly 10 years of hesitation, and especially in light of the Ukraine situation, we need to act. This is a necessity," Hungarian Energy Minister Andras Aradszki told Reuters.
This Russia Today story showed up on their Internet site at 4:45 p.m. Moscow time on their Wednesday afternoon, which was 8:45 a.m. EST. My thanks go out to Roy Stephens for sending it.
Two out of ten coal-fired power plants in Ukraine only have enough stock for a few days, as the key coal mines supplying the plants are located in Donbass where Kiev and self-defense forces are fighting, says Ukraine's Deputy Energy Minister Yury Zyukov.
In 2012 and 2013 Ukraine extracted about 85 million tons of coal, of which 40 billion tons were used for domestically, Zyukov told Glavkom magazine, adding that previously Ukraine even exported coal.
“Situations as this one have never happened in the history of an independent Ukraine, we have never had such precedents.”
“Do you know that Zmiev TPP has 30 thousand tons of coal reserves and the Tripol TPP has 50 thousand? That is literally enough for just for a few days,” Zyukov said. “That is why we needed coal from South Africa - we have no reserves.”
This is another article from the Russia Today Internet site. This one showed up on there at 4:09 p.m. Moscow time yesterday afternoon---and it's the second contribution in a row from Roy Stephens.
On Friday, the Ukrainian military’s P.R. machine spun-up its latest episode of the illusive “Russian Invasion”, this time accusing Moscow of dispatching a column of 32 tanks and “truckloads of Russian troops” into the country’s eastern region.
The West are being very choosy with their language – in case they have to deny they ever said it later. Presently, the West and Kiev are stopping short of labeling the non-event as an invasion, instead calling it “Russian aggression”, and a “cross-border incursion” to aid separatists, with the all-important caveat of “unconfirmed report”, a PR system standardized by CIA media handlers currently in residence inside the U.S.-backed Kiev regime.
Another ‘Russian Invasion’?
The timing, and the sheer desperation of this latest P.R. move is designed for one thing: deflecting public attention away from the fact that Ukrainian military have already broken the fragile ceasefire with rebels, as Kiev resumes its shelling of civilian areas around Donetsk and Lugansk.
This article, a repost from the 21stcenturywire.com Internet site back on November 8---appeared on the russia-insider.com Internet site just after midnight Moscow time on their Wednesday morning---and it's courtesy of South African reader B.V. It's worth reading.
The caliphate has a beach. It is located on the Mediterranean Sea around 300 kilometers (186 miles) south of Crete in Darna. The eastern Libya city has a population of around 80,000, a beautiful old town and an 18th century mosque, from which the black flag of the Islamic State flies. The port city is equipped with Sharia courts and an "Islamic Police" force which patrols the streets in all-terrain vehicles. A wall has been built in the university to separate female students from their male counterparts and the disciplines of law, natural sciences and languages have all been abolished. Those who would question the city's new societal order risk death.
Darna has become a colony of terror, and it is the first Islamic State enclave in North Africa. The conditions in Libya are perfect for the radical Islamists: a disintegrating state, a location that is strategically well situated and home to the largest oil reserves on the continent. Should Islamic State (IS) manage to establish control over a significant portion of Libya, it could trigger the destabilization of the entire Arab world.
The IS puts down roots wherever chaos reigns, where governments are weakest and where disillusionment over the Arab Spring is deepest. In recent weeks, terror groups that had thus far operated locally have quickly begun siding with the extremists from IS.
In September, it was the Algerian group Soldiers of the Caliphate that threw in its lot with Islamic State. As though following a script, the group immediately beheaded a French mountaineer and uploaded the video to the Internet. In October, the "caliphate" was proclaimed in Darna. And last week, the strongest Egyptian terrorist group likewise announced its affiliation with IS.
This longish essay was posted on the German website spiegel.de at 7:20 p.m. EDT on their Tuesday evening---and it's courtesy of Roy Stephens. Normally I'd save this for the weekend, but it's a slow news day, so here it is now.
Islamic State has consolidated its grip on oil supplies in Iraq and now presides over a sophisticated smuggling empire with illegal exports going to Turkey, Jordan and Iran, according to smugglers and Iraqi officials.
Six months after it grabbed vast swaths of territory, the radical militant group is earning millions of dollars a week from its Iraqi oil operations, the U.S. says. Coalition air strikes against tankers and refineries controlled by Isis have merely dented – rather than halted – these exports, it adds.
The militants control around half a dozen oil-producing oilfields. They were quickly able to make them operational and then tapped into established trading networks across northern Iraq, where smuggling has been a fact of life for years. From early July until late October, most of this oil went to Iraqi Kurdistan. The self-proclaimed Islamic caliphate sold oil to Kurdish traders at a major discount. From Kurdistan, the oil was resold to Turkish and Iranian traders. These profits helped Isis pay its burgeoning wages bill: $500 (£320) a month for a fighter, and about $1,200 for a military commander.
The U.S. has pressured Iraqi Kurdistan’s leaders to clamp down on smuggling, with limited success. But oil is still finding its way to Turkey via Syria, with Islamic State deftly switching from one market to another, smugglers say, with cheap crude channelled to Jordan instead. On Monday, a U.N. panel urged countries neighbouring Iraq and Syria to seize oil trucks that continue to flow out from jihadist-occupied territory.
This essay appeared on The Guardian website at 1:06 p.m. GMT yesterday afternoon---and I thank reader B.V. for digging it up for us.
With growth rates for steel products at or near record lows and prices for end-product having plunged to record lows, it is little surprise that the Steel industry would provide the largest Chinese bankruptcy yet in this cycle.
As Bloomberg reports, unlisted Haixin Iron & Steel - which halted production and defaulted on CNY3 bn in March - has started bankruptcy proceedings. Having spent 8 months hoping for the government bailout that every Western onlooker believes is every firm's god-given right, a reorganization application for the Wenxi, Shanxi province-based company (with $1.7 billion of total debt) was accepted by the Yuncheng City Intermediate People’s Court.
This is just the start as "Haixin Group’s bankruptcy will be followed by others," according to researcher Mysteel.com's Chief Analyst Xu Xiangchun.
This interesting article put in an appearance on the Zero Hedge website at 8:16 a.m. EST on Wednesday morning---and I thank reader 'David in California' for passing it around.
A two-year Senate-led investigation is throwing back the curtain on the outsize and sometimes hidden sway that Wall Street banks have gained over the markets for essential commodities like oil, aluminum, and coal.
The Senate's Permanent Subcommittee on Investigations found that Goldman Sachs and JPMorgan Chase assumed a role of such significance in the commodities markets that it became possible for the banks to influence the prices that consumers pay while also securing inside information about the markets that could be used by the banks' own traders.
Bankers from both firms, along with other industry executives and regulators, will testify about the allegations at hearings on Thursday and Friday.
The report provides an unprecedented level of detail about the enormous global operations the banks have built up in recent years since politicians and regulators lifted long-time curbs on banks owning physical commodities and infrastructure.
Of course this includes the precious metals, plus oil and copper. This must read article put in an appearance on The New York Times website at 5:01 p.m. EST on Wednesday afternoon---and the first person through the door with it was U.K. reader Nigel Bunting. There was also an AP story about it as well. It appeared on the abcnews.go.com Internet site at 7:27 p.m. EST last evening. It's headlined "Report: Role of 3 Big Banks in Commodities Risky"---and it's courtesy of Elliot Simon.
The U.S. Commodity Futures Trading Commission (CFTC) today launched CFTC SmartCheck, a new national campaign to help investors identify and protect themselves against financial fraud. The comprehensive campaign includes a new website, a national advertising campaign and interactive videos that will help investors spot investment offers that are potentially fraudulent. The new website, SmartCheck.CFTC.gov, unveiled today, is an educational tool that helps investors conduct background checks of financial professionals.
“The CFTC is committed to protecting investors from fraud, and we demonstrate that commitment today with the launch of CFTC SmartCheck,” said CFTC Chairman Tim Massad. “This campaign provides investors with new interactive tools that include the website as well as a targeted advertising campaign and collaborative outreach with allied organizations.”
Over the coming months, the CFTC SmartCheck campaign will include online, television, and print advertising slated to run nationwide and additional outreach efforts with organizations aligned with the CFTC’s mission to reduce financial and investment fraud. The campaign will also feature special events to reach investors and encourage them to use the online tools available at SmartCheck.CFTC.gov. In addition to the background-check tools, the SmartCheck.CFTC.gov website includes a range of information for investors, including interactive videos that help illustrate how to avoid fraud.
This news item showed up on the CFTC's website yesterday---and I found it embedded in silver analyst Ted Butler's mid-week commentary yesterday---and this was his scathing right-on-the-money comment on it. "Here’s the latest announcement from the CFTC warning the public on financial fraud in commodities. Funny, there was no mention of the ongoing scam in COMEX silver which many thousands of market participants have written the agency about. I hate to be cynical but why does this seem like a perfect bureaucratic solution – instead of resolving a manipulation most everyone is aware of, come out instead with a public campaign to warn people of financial fraud in commodities. Marvelous." I know what we should all do, dear reader, is click on the website and ask them to check out the precious metal price rigging scam on the COMEX.
Building contractor Alan Stockmeister is known around town for his stewardship of local businesses: radio stations, a movie theater and a bank, for example. But nothing has been quite like his refinery just off Main Street, which has become an outpost in the multibillion-dollar global gold trade.
Ohio Precious Metals LLC owns one of five refineries in the U.S.—there are 73 world-wide—certified to melt scrap gold and pour it into ingots that can be traded on global markets. OPM’s more than 170 workers process several billion dollars a year in gold and silver headed for banks and jewelers in New York, London and Shanghai.
“Historically, gold refineries have been near production sites, mines or the big financial centers where gold is traded,” says David Jollie, a London-based analyst at gold trader Mitsui Precious Metals. Ohio “is not really one of those places.”
OPM has been able to stay in south-central Ohio in part because gold prices, while 30% below their 2011 peak, are about triple what they were in 2004. Sales of gold to make rings, watches and electronics have increased 70% over the last 10 years, according to Thomson Reuters GFMS. Recent price declines mean that gold production at mines hasn’t kept pace, in turn fueling demand for cheaper-to-produce gold scrap.
OPM is a well-known brand name in our store---and reader Ken Hurt sent this Wall Street Journal story our way yesterday
Demand for silver will post a 7% decline in 2014 because of a slower pace of buying by jewellers and industrial fabricators in the first three quarters of the year, metals consultant Thomson Reuters GFMS said on Tuesday.
Harmonized European sales tax rates that started in January have driven up retail silver investment product prices, reducing demand on the continent, the Thomson Reuters unit said in an interim market review.
Thomson Reuters GFMS said it expected total physical demand, which includes jewellery, coins and bars, silverware and industrial fabrication, to fall 6.7% to 31,243.44 tonnes in 2014 from a record high of 33,498.44 tonnes last year.
Silver industrial demand is forecast to drop 1.8% as the electronics sector keeps shifting to cheaper metals. Jewellery consumption should fall 4.4% because retailers are pushing more gold products to take advantage of lower bullion prices, GFMS said. For the full year, Thomson Reuters GFMS now forecasts silver prices to average $19/oz an ounce, a 20% decline from $23.79/oz in 2013.
Since it was Gold Field Mineral Services that said this, I'd take this Reuters story with a big grain of salt. It was picked up by the miningweekly.com Internet site yesterday---and I thank Malcolm Roberts for sharing it with us.
Focusing on the Netherlands Central Bank's reduction of its gold reserves, Bullion Star market analyst and GATA consultant Koos Jansen asks why the European central banks sold (or purported to sell) so much gold from the announcement of the Washington Agreement on Gold in 1999 through 2010, when such sales stopped almost completely. Jansen cites a comment by the Dutch treasury secretary in 2011 in support of his speculation that the gold sales may have been intended to help redistribute and equalize official gold reserves around the world.
This is exactly what the U.S. economists and fund managers Paul Brodsky and Lee Quaintance speculated in 2012 -- that central banks were moving their gold around so that nations would be better prepared for a complete resetting of the world financial system, in which gold would play an important part for building confidence.
Of course on a planet with actual financial journalism, mainstream news organizations would question central banks about this -- and about everything else central banks do. Since we're living on Earth, Jansen's citing the Dutch parliamentary archive and posing the question it suggests will have to suffice today.
This commentary by Koos is embedded in this GATA release from yesterday---and I thank Chris Powell for writing the above paragraphs of introduction. It's worth reading.
Support among Swiss voters for a referendum proposal that would force a huge increase in the central bank's gold reserves has slipped to 38 percent, an opinion poll showed on Wednesday, falling short of the majority backing it needs to become law.
Under the "Save our Swiss gold" proposal, the Swiss National Bank would be banned from selling any of its gold reserves and would have to hold at least 20 percent of its assets in the metal, compared with 7.8 percent last month. ...
Wednesday's poll, conducted by Berne-based research institute gfs.bern in partnership with Swiss broadcaster SRG, showed 47 percent opposed the initiative, which has been led by the right-wing Swiss People's Party, while 15 percent were undecided or gave no answer.
This Reuters article, co-filed from Zurich and London, put in an appearance on their website at 11:29 a.m. EST on Wednesday---and I found this story over at the gata.org Internet site.
Russia’s central bank bought about 150 metric tons of the metal this year, announced Governor Elvira Nabiullina yesterday. The pronouncement immediately created buying in the market, prompting gold to rise to a two week high at $1,200 an ounce.
Russia's central bank Governor Elvira Nabiullina told the lower house of parliament about the significant Russian gold purchases. She is an economist, head of the Central Bank of Russia and was Vladimir Putin's economic adviser between May 2012 to June 2013.
This announcement is unusual and to our knowledge has not happened before. The announcement by the Russian central bank governor was likely coordinated with Putin and the Kremlin and designed to signal how Russia views their gold reserves as a potential geopolitical and indeed financial and currency war weapon.
Gold currently constitutes for around 10% of the bank's gold and forex reserves, she added.
"Unusual" is an understatement. A better word would be "astonishing"---and in case it might have been lost on you, dear reader, I'd bet that this announcement was a veiled threat that, as I've said many time in the past, all Putin has to do is say the word---and the precious metal price management scheme would blow up in a New York minute---and take a large chunk of the Western banking/financial system with it---including Canada's beloved Scotiabank. This must read commentary by Mark O'Byrne appeared on the goldcore.com Internet site yesterday---and the first person through the door with it was South African reader B.V.
One intriguing possibility is one which Russia has, in fact, contemplated before: Backing the currency with Russia’s gold reserves. In the late 1980s, as the Soviet Union was breaking up, the rouble was in free-fall and inflation was soaring. Russia had essentially zero access to global capital markets and relied on oil exports for hard currency with which to trade with other nations. In 1989, Premier Gorbachev invited two prominent US economists to Russia, where they met with senior economic policy officials and recommended precisely this as the best way to stabilise the rouble. One of the two was former Fed governor Wayne Angell; the other, Jude Wanniski of ‘supply-side’ economic fame. In 1998, Mr Wanniski wrote that he “became alarmed about the financial collapse in Russia,” and decided to “write a piece on how to fix Russia right away, before it was in complete chaos.” In the Wall Street Journal editorial that followed, Mr Wanniski explained the longer history of the gold-backed rouble idea:
In September 1989, the Soviet government of Mikhail Gorbachev invited me to Moscow for nine days to discuss my unorthodox views on how the U.S.S.R. could make the conversion to a market economy. I’d been arguing that the process had to begin by fixing the ruble price of gold at a credible rate of exchange, which I believed then would be a relatively easy thing to do. I still believe that.
This long essay by John Butler appeared on David Stockman's website yesterday---and certainly falls into the absolute must read category. The first person through the door with this commentary was Dan Lazicki.